WHEN ONE JERKS A HARD-WIRED SMOKED DETECTOR FROM THE CEILING, FOR LACK OF A BACK-UP 9-VOLT, THERE MAY BE AN ISSUE. WHEN ONE PUTS A HAMMER THROUGH A STILL BEEPING SMOKE DETECTOR AND SPONTANEOUSLY PRONOUNCES SAID DEVICE TO NOW BE A “GOOD SMOKE DETECTOR,” THERE MAY BE AN ISSUE. STRESS CREATES, SITUATIONS. THE END OF THE MOST PROSPEROUS BULL MARKET CREATES SOMETHING ELSE, FUGLY AND COMPLEX. MANY TURN TO THE WONDERS OF NATURE IN HARD TIMES. THEY IMMERSE THEMSELVES IN TIMELESS BEAUTY AND QUIET. RIGHT.
STOCKjAW HAS GONE ANOTHER WAY–OUT. TREACHERY APPEARS IN MANY FORMS. OUR MARKET ABSOLUTELY BRIMS WITH FUNKY DOO. HAVE WE HIT BOTTOM? IS THE FED LISTENING? HAS OUR BULL BEEN KILLED?
Fed fun breeds the acrid stink of terror…
Huffin’, puffin’, raisin’, and unwindin’, even “over-shootin, if that’s what it takes to anticipate inflation.” Well, why announce that? Yes, the fed isn’t exactly responsible to the stock market. Many will assure you that the economy and the equity market are two completely separate things. The equity market is not a moon base, but rather constituent part of the economy. So where’s the separation exactly?
Yellen understood–Ben too. Once it seemed reasonable to expect restraint from our fed chair. How hard is that? The balance of any equity market is tenuous at best. Chucking cinder blocks into the mix is not restraint, or leadership. Does it make any sense to kill the patient while pursuing the pathology?
And really, as market master Jim Cramer pointed out, that top-down economic analysis is ill-suited to determine current business health and activity.
The Savaging Of A Played Bull
savvy market minds will tell you that “no one wins in a trade war.” All markets abhor uncertainty. Further, no one with experience believes China will accede to bullying. The ancient notion of “saving face” remains as real and true now as ever. Creating even the illusion of cooperation, allowing for the appearance of willful concessions, is the only proven way to work with a rapidly rising China.
Europe is slowing, grappling with “nationalist” politics, immigration, and punishing the UK for leaving the fold.
The debt-funded sugar-rush of the tax cuts is waning. Downturns in the equities market are lead by small caps. The Russell 2000 Small cap index is Death Crossing(IWM), along with most or our beloved FANG. They have been our solely leaders over much of the past year.
That FANG leadership has been crushed, in part by high valuations, sky-high investor expectations, fevered profit-taking by nervous institutions, and anti-trust talk from the oval office and serial fines from the EU. Additional weight has come from the EU’s GDPR, and swelling privacy concerns in the U.S., mostly generated by Facebook’s reckless disregard.
And then we have negative price action on heavy volume, followed by suck-bet weak rebounds. We have a flat yield curve threatening to invert. We have non-performing sectors in housing, autos, financials, semis, industrials, defense contractors, and now big tech. Add in the specter of drug pricing regulation and
looming national debt amid rising rates that magnify the cost of repayment. How about heavy corporate leverage? Political dysfunction will not save us from these woes. We see no bottom here. We see no price stability, even at much lover prices.
What did we do? We broomed it all.
Now we watch and build our wish list, waiting for a return of stability–an investable bottom even.
Thanks for reading.
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